EQUITIES:Market indices to maintain upward trend

The upward trend in the equities segment of the Nigerian Stock Exchange (NSE) last week is expected to continue this week, as more banksÂ to turn in their reportsÂ for the 2009 financial year.

Last week, investors holdings in the market rose by N216.93 billion as the value of listed equities, represented by the market capitalisation and All-share index, rose by 3.54 per cent.

The capitalisation closed the week at N6.341 trillion fromÂ N6.124 trillion the previous week, while the index garnered 896.87 basis points to close at 26,219.74 points from 25,322.87 points.

Two banks â€” Zenith Bank Plc and United Bank for Africa released their financial statements to the investing community, last week.

Zenith Bank Plc, in its audited result for the 15-month ended, December 31, 2009, recorded a 31.03 per cent growth in its gross earnings to N277.3 billion compared to N211.6 billion recorded in its 2008 financial year, its profit before tax stood at N35 billion while its profit after tax dropped by 60.37 per cent to N20.63 billion compared to N52 billion in 2008.

The bankÂ proposed a 45 koboÂ dividend per shareÂ and a bonus of one ordinary share for every four ordinary shares held by its shareholders.

United Bank for Africa Plc announced a dividend of 10 kobo per share and a bonus of one ordinary share for every five ordinary shares held by its shareholders.

It gross earnings appreciated by 45.56 per cent to N246.7 billion compared to N169.51 billion recorded in its 2008 financial year. Profit before tax and extraordinary items, however dropped by 75.95 per cent to N13.66 billion compared to N56.82 billion recorded in 2008, while its profit after tax stood at N2.38 billion compared to a profit after tax of N40.83 billion recorded in 2008.

This week, investors would begin to take position in UBA, ZenithÂ and other banksâ€™ stocks in anticipation of attractive bonus declaration and dividend payout.

Investors are optimistic that GTBank Plc, First Bank of Nigeria Plc, among others are likely to declare impressive dividends and bonus distribution.
Also, with the approval of ministers by the National Assembly and their likely swearing-in this week, it is expected that the activity will return to economy, especially they will begin to implement the recently approved budget.

BONDS
Market to return to bullish trend

The bond marketÂ would likely experience increased buying this week with prices rising and yields declining as banksÂ take advantage of the two weeks fall in prices and the increased excess liquidity to invest in bonds.

Last week, the market, for the second consecutive week experienced general decline in activities with price decline for all the various securities. Consequently Yields rose across board.Â The activities in the bonds market as characterised by the prices direction and their corresponding yields seems to favour all the tenors as against the preference for short tenured securities the previousÂ week.

The 5th FGN Bond 2018 Series 2 recorded the highest patronage, with a turnover of 86.9 million units valued at N119.16 billion in 853 deals. This was followed by the 4th FGN Bond 2017 Series 9 with a traded volume of 53.54 million units valued at N64.814 million in 456 deals.

Mutual Funds

The upward trend in the mutual funds listed on the Memorandum Quotation segment of the Nigerian Stock Exchange (NSE), is expected to continue this week, going by the continuous bullish trend in the equitiesâ€™ market.
Last week, of the 26 mutual funds, nine recorded price appreciation, 15 remained unchanged while two experienced price decline compared to three in the previous week.

FOREIGN EXCHANGE

Naira to record marginal depreciate

The naira will experience marginal depreciation this week as there would be only one foreign exchange auction session by the Central Bank of Nigeria (CBN) courtesy of the Easter holiday.

Last week despite movements in the official exchange rate, theÂ naira remained stable atÂ N148.3 per dollar. On Wednesday the naira appreciated by 20 kobo against the dollar yesterday following 37 decline in foreign exchange demand at the official market.

Foreign exchange demand at the Wholesale Dutch Auction System (WDAS) session conducted by the Central Bank of Nigeria (CBN)Â fell by 37 per cent to N$157.77 million from $252.5 million on Monday. Also the apex bank boosted supply by increasing amount offered to $250 million from $150 million. Consequently, the official exchange rate dropped to N148.3 per dollar from N148.5 per dollar on Monday.

Investigations reveal that the decline in demand was due to the impending Eater holiday. According to a senior foreign exchange dealer, the holiday would slow down economic activities hence banks anticipate less foreign exchange needs by customers and as a result didnâ€™t want to hold too much dollar reserve.

The decline in demand sharply contrast the huge increase in demand recorded at the WDAS session on Monday, which triggered 21 kobo depreciation of the naira

The depreciation of the naira was triggered by 137 per cent increase in foreign exchange demand which rose to $252.4 million from $106 million Wednesday last weekAs a result the official exchange rate rose to N148.51 per dollar from N148.3 the previous week.

MONEY MARKET

Cost of funds to remain with current band
The interbank interest rates would remain within the current band given the over N600 billion idle funds in the market.

Funding of foreign exchange purchases at the WDAS session and treasury bills investment causedÂ interest rate to rise marginally in the first half of the week butÂ fell in the second half of the week. As a result cost of funds forÂ closed a bit higher than they were the previous week.

Call lending closed at 1.1750 per cent up from 1.667 per cent the previous week. Similarly, 30 days lendingÂ closed at 5.17 per cent up from 4.87 per cent. On the other hand the market experienced inflow of N85 billion of the $1 billion expected from the excess crude account and this aggravated the excess liquidity condition of the market.